Medicare: 30th Anniversary

“It provides free hospital services for public patients in public hospitals through the Australian Health Care agreents with the states, subsidises private patients for hospital services (75 per cent of the schedule fee) and provides benefits for out-of-hospital medical services such as consultations with GPs or specialists (85 per cent of the schedule fee) with no limit on fees actually charged.”
Medicare also provides benefits for optometrical services (85 per cent of the schedule fee), but with no benefits payable if higher fees are charged.
Following mounting dissatisfaction with the existing voluntary health insurance sche, major changes to Australia’s health-care syst were introduced by the newly-elected Whitlam government.
Medibank commenced on 1 July 1975 after the passing of the Medibank legislation by a joint sitting of Parliament on 7 August 1974.
According to the second-reading speech of the Health Insurance Bill 1973 delivered by the social services minister, Mr Bill Hayden, on 29 Novber 1973, the purpose of Medibank was to provide the “most equitable and efficient means of providing health insurance coverage for all Australians”. The objectives of the original Medibank wereThe original legislation proposed financing the program through a taxpayer levy of 1.35 summarised by one of its architects, RB Scotton, as universal in coverage, equitable in distribution of costs, and administratively simple to manage.per cent on taxable income, with exptions for low-income earners. However the Senate rejected the bills dealing with financing of the program in August 1974 and again in Decber 1974.
Consequently, the final program was funded entirely from general revenue.
The cost of Medibank in its first year (1975-76) was $1.647 billion, according to Scotton (1977). The hospital side of Medibank involved free treatment for public patients in public hospitals, and subsidies to private hospitals to enable th to reduce their fees.
The Medibank program had only a few months of operation before the dismissal of the Whitlam government on 11 Novber 1975, and the subsequent election of the Liberal-National coalition under Mr Malcolm Fraser in Decber 1975.
‘Medibank Mark II’ was launched on 1 October 1976 and included a 2.5 per cent levy on income, with the option of taking out private health insurance instead of paying the levy.
Other significant changes in 1976 included the federal government declaring the hospital agreents with the states invalid, and the subsequent introduction of new hospital agreents under which the federal government provided 50 per cent funding for approved net operating costs. Also in 1976 legislation was passed allowing the Health Insurance Commission (HIC) to enter the private health insurance business. This led to the establishment of Medibank Private on 1 October 1976.
In 1978 medical benefits were reduced to 75 per cent of the schedule fee and bulk billing was restricted to holders of Pensioner Health Benefits cards, and those deed by the doctor to be, in the Minister’s words, ‘socially disadvantaged’. The health insurance levy, and the compulsion to insure was abolished in 1978.
In 1979 Medicare benefits were limited to the difference between $20 and the scheduled fee. And in 1981 access to free hospital and medical care was restricted to pensioners with health care cards, sickness beneficiaries, and those meeting stringent means tests. An income tax rebate of 32 per cent was introduced for those with private health insurance.
The major changes introduced by the Fraser government were largely rejected by the Hawke government, which returned to the original Medibank model. Although the financing arrangents were different, and there was a name change from Medibank to Medicare, little else differed from the original.
Medicare as known now came into operation on 1 February 1984, following the passage in Septber 1983 of the Health Legislation Amendment Act 1983. It differed from the original Medibank program only in matters of detail.
Dr Neal Blewett, PhD, in his second reading speech in Septber 1983, described the legislation as “a major social reform” that would “body a health insurance syst that is simple, fair and affordable”. He also phasised the “universality of cover” as being “desirable from an equity point of view” and “in terms of efficiency and reduced administrative costs”.
Funding for Medicare was to be offset by a Medicare levy, originally set at 1 per cent of taxable income, with a low income cut-off point of $7110 per year for a single person and $11 803 for married couples and sole parents. Below those income levels no levy was payable. The Medicare levy is currently set at 1.5 per cent of taxable income.